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HMRC internal manual

VAT Transport

HM Revenue & Customs
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The handling and storage of ship and aircraft cargo: Services zero-rated under item 6(b)

Item 6(b) of Group 8 zero-rates the handling and storage of ship and aircraft cargo when the service is provided

  • In a port,
  • On land adjacent to a port,
  • customs and excise airport, or
  • transit shed

for further explanation of these places see VTRANS070400 

The relief under item 6(b) is not confined to movements of goods into or out of the UK and therefore applies equally to handling and storage services relating to internal sea, river or air movements within the UK.


Item 6(b) of Group 8 is interpreted in the light of the wording of the Sixth Directive, and therefore relates to services which serve the direct needs of the ship or aircraft or its cargo.

The meaning of serving the direct needs of a ship was one of the questions addressed by the ECJ in the case of Gunther Berkholz (ECJ 168/84). Berkholz argued that the services of operating gaming machines on ferries plying between Germany and Denmark should be exempted under Article 15(8) of the Sixth Directive. The Court found that

the only services exempted under Article 15(8) are those which are directly connected with the needs of sea-going vessels or their cargoes, that is to say services necessary for the operation of such vessels. The installation of gaming machines whose object is to entertain the passengers and which themselves have no intrinsic connection with the navigational requirements cannot be classed as such.

In the Court of Appeal case EB Central Services [2008] STC 2209 concerned the storage of left luggage at airports, here it was held that

The direct needs met by the taxpayers’ services were not those of aircraft or their cargoes at all, but those of passengers who, for one reason or another, had not checked in and consigned to the operators of the aircraft their luggage for transportation on their aircraft flights. Until that had been done the services supplied by the taxpayers were for the convenience of the passengers, not to meet the direct needs of aircraft or their cargoes.